• The government set the ambitious target of building more than four crore new houses by 2022
  • One crore rural houses to be built by March 2019
  • 69 lakh rural houses, 40% of targets still to be met
  • 35% of the houses not complete even after two years of being sanctioned
  • Progress in urban areas is slower, only 12.4 lakh houses built till December 2018

The Modi government made a grand announcement in June 2015. It said by 2022 – India’s 75th year of independence – every Indian would have a brick and cement house with gas, water, electricity and a toilet.

The scheme at the foundation of this promise is the Pradhan Mantri Awas Yojana, which provides subsidies for building low cost houses in both rural and urban areas.

Through the scheme, the government aims to subsidise the construction of 2.95 crore rural houses and 1.2 urban houses by 2022.

In rural areas, the government had set itself the goal of building 1 crore houses by March 2019. It is likely to miss this deadline. As of February 11, it has completed the construction of 69 lakh houses, with 40% of the target still pending.

In urban areas, the urban affairs minister Hardeep Singh Puri claimed in September that 50% of the target had been met. But the government’s website shows of the 1.2 crore urban houses it aims to build, 68.5 lakh houses have been sanctioned, and just 18% of the sanctioned houses have been built.

Prime Minister Narendra Modi visiting an exhibition at the launch of Pradhan Mantri Awas Yojana (Rural) in Agra, Uttar Pradesh in 2016. Photo: PTI

How does the rural scheme work?

PMAY (rural) is an extension of the Indira Awas Yojana, which was launched by the Congress government in the 1980s. It gave Rs 70,000 as cash incentives to rural families in need of pucca homes. PMAY has increased the amount to Rs 1.2 lakh per house in plain areas and Rs 1.3 lakh in hilly or remote areas. Each house needs to be at least 270 sq ft in size.

Beneficiaries are selected through the housing deprivation parameters in the Socio-Economic and Caste Census of 2011, which are further verified by gram sabhas.

Block-level officers are expected to submit a photograph of each potential beneficiary in front of their current house, as well as a geo-tagged photograph of the land on which the proposed PMAY house is to be built. State governments are required to free up public land for landless beneficiaries.

Once beneficiaries are verified, the government issues sanction orders for the construction. The cash incentives for construction have to be disbursed to beneficiaries in either three or four instalments – the first installment at the time of sanction and the rest at different stages of construction.

What is the budget for the scheme?

For the first financial year of 2016-17, the Ministry of Rural Development, which is implementing the scheme, had asked for Rs 34,050 but the Centre allocated just Rs 16,000 crore. This gap reduced over the years.

The total amount of Central funds utilised by the states has also increased over the years, from 21% in 2016-17 to 79% in 2018-19.

What is the progress on the ground?

According to data available on the official PMAY (Rural) website, a total of 1.1 crore beneficiaries have been registered under the scheme across India so far, out of which 95 lakh homes have been sanctioned. Of these, construction was complete for 63% of the registered beneficiary homes, or 69 lakh homes, as of February 11.

A report by Accountability Initiative at the Centre for Policy Research notes that the construction of rural houses is taking much longer than the 12 months prescribed by the scheme’s guidelines. Thirty-five percent of the houses were not complete even after two years of being sanctioned.

Of the 69 lakh beneficiaries who have completed constructing their homes, only 31 lakh have received all four instalments of their cash incentives, as of February 11. The rest are yet to be paid the full amount, which is a financial burden for households that may have struggled to get their homes constructed.

Why has implementation been slow?

PMAY (Rural) may be effective for landowners without pucca houses, but most landless beneficiaries have been at a major disadvantage. State governments have not been able to free up adequate public land for the landless. A letter written by the union rural development ministry on January 4 said only 12% of the total 4.7 lakh landless beneficiaries had been given land on which to construct homes.

The disbursement of instalment payments has been delayed, which has forced some beneficiaries to complete construction on their own, without assistance. In Arunachal Pradesh, 1,314 houses have been sanctioned, out of which 67 have been built. However, the government has not disbursed even one instalment of the cash incentives. Despite this, on its official website, PMAY (Rural) takes credit for the completion of those 67 houses.

However, even though implementation has been slow, more houses were constructed annually under PMAY (Rural) for the first two years of the scheme, compared to the number of houses constructed annually under the Indira Awas Yojana.

How does the urban scheme work?

PMAY (Urban) is implemented by the Ministry of Housing and Urban Affairs. It offers cash subsidies of Rs 1.3 lakh to Rs 2.6 lakh to eligible beneficiaries in urban areas through four sub-schemes.

Beneficiary-led housing construction: Those who want to construct their own homes on private land in urban areas can apply for subsidies. According to a November 2018 report, 56% of India’s PMAY (Urban) beneficiaries opt for this sub-scheme.

Affordable housing by the government: In housing projects built on government land, eligible first-time home buyers can avail of a subsidy of Rs 2.5 lakh per unit. To give a boost to this sub-scheme, the government introduced a policy of public-private partnerships in September 2017, encouraging private sector participation.

In-situ slum rehabilitation: Private builders can take up a slum redevelopment project and avail of PMAY subsidies for each housing unit. Despite burgeoning slums in metropolitan cities, this scheme has not been popular among builders. In states like Maharashtra, existing Slum Rehabilitation Authority projects have been co-opted into PMAY (Urban), even though SRA beneficiaries get free homes and do not need any subsidies. This allows the government of Maharashtra to claim that it has built at least 2.2 lakh housing units under the PMAY’s slum rehabilitation vertical.

Credit-linked subsidy scheme: First-time urban home buyers with an annual household income of less than Rs 18 lakh per year can apply for subsidies after their home loan application is approved. The subsidy is paid directly to the bank, easing the pressure of loan repayment for the home buyer. The subsidy amount ranges from Rs 2.3 lakh to Rs 2.67 lakh depending on the income category of the beneficiary (economically weaker section, low-income group or middle-income group).

In response to a Right to Information query by Scroll.in, the Union Ministry of Housing and Urban Affairs said 3.14 lakh beneficiaries have been sanctioned loans amounting to Rs 6,943 crore under the credit-linked subsidy scheme. A majority of 1.4 lakh are from the lower-income group.

What is the progress on the ground?

The urban affairs ministry data shows it had completed and handed over 12.4 lakh houses by December 2018. This represents 18% of the 68.5 lakh houses sanctioned so far. Another 35.6 lakh houses are in various stages of construction.

A report by ratings agency CRISIL in December 2018 reveals that house completion rates under PMAY (Urban) have been low across most states.

With house completion taking an average of two or three years, the government needs to finish sanctioning all homes by 2020 in order to finish all construction by 2022, the report states.

The report estimates the government will need Rs 1.5 lakh crore to meet the target of building 1.2 crore urban houses by 2022. Only 22% – around Rs 33,000 crore – has been disbursed so far.

How much of urban affordable housing is possible?

The government has recognised the need to increase the pace of construction for PMAY (Urban) houses. On January 14, it launched a “Global Housing Technology Challenge” which aims to encourage better construction technologies that will enable building houses faster at a lower cost.

But the biggest challenge is the availability of land. The CRISIL report estimates at least 30,000 acres of urban land is needed to build 1 crore houses. Finding such land is “next to impossible” in metro cities, it states.

That explains why most public-private housing projects under PMAY are located on the outskirts of cities, far away from most people’s places of work.

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This article is part of The Modi Years series which recaps the major milestones, controversies and policies of the BJP government.